June 08, 2023
WASHINGTON, June 8, 2023 – Close to 2,000 companies and a total of 270 trade associations from across the country signed letters this week calling on Congress to pass the Credit Card Competition Act, the Merchants Payments Coalition said today.
“This legislation has twice as many sponsors as last year and the number of small businesses and trade associations voicing their support is increasing every day,” MPC Executive Committee member and National Association of Convenience Stores General Counsel Doug Kantor said. “Momentum is building rapidly and it’s clear that swipe fee reform is a bipartisan issue that’s about Main Street versus Wall Street, not one party versus the other. These fees impact small businesses and consumers in every state and congressional district in the nation and these letters are proof that Main Street is calling for relief.”
“This is landmark legislation that would help fix a broken market that has allowed Wall Street megabanks and global card networks to block competition and unfairly profit at the expense of Main Street merchants and American families for far too long,” the trade associations said in a letter sent to all members of Congress on Wednesday. “Passing this bill is one of the most important things Congress can do to provide relief for small businesses and consumers struggling amid near-record inflation.”
A separate letter sent to Congress today by 1,980 individual merchant companies said Visa and Mastercard’s control of more than 80 percent of the U.S. credit card market means “they do not have to compete with any other service provider for merchant business” and that they “bar their competitors from even having a shot at business with banks that issue their cards.”
“The Credit Card Competition Act would bring much-needed relief to retailers and American consumers by simply requiring that Visa and Mastercard compete with other networks for both merchants and bank business,” the companies said
The letters were sent after the Credit Card Competition Act was reintroduced this week by Senators Richard Durbin, D-Ill.; Roger Marshall, R-Kan.; Peter Welch, D-Vt., and J.D. Vance, R-Ohio, and by Representatives Lance Gooden, R-Texas; Zoe Lofgren, D-Calif.; Thomas Tiffany, R-Wis., and Jefferson Van Drew, R-N.J.
The eight sponsors are twice the number when Durbin and Marshall first unveiled the measure last July and an identical bill was introduced in the House in September by Gooden and Welch before Welch was elected to the Senate.
The bill would address “swipe” fees averaging over 2 percent of the transaction that banks and card networks like Visa and Mastercard charge merchants to process credit card transactions. Credit and debit card swipe fees have doubled over the past decade, soaring by $22 billion in 2022 alone to a record $160.7 billion, and are most merchants’ highest operating cost after labor, driving up consumer prices by an estimated $1,024 a year for the average family. As a percentage of the transaction, credit card swipe fees automatically go up as prices rise, creating a multiplier effect on inflation.
Visa and Mastercard currently price-fix swipe fees charged by banks that issue cards under their brands, and also block transactions on the cards from being processed over other networks that could do the job with lower fees and better security. The legislation would require banks with $100 billion or more in assets enable cards they issue to be processed over at least two unaffiliated networks – Visa or Mastercard plus a competitor like NYCE, Star or Shazam.
Banks would decide which networks to enable, but merchants would then choose which to use on individual transactions, meaning networks would have to compete over fees, security and service, saving merchants and their customers an estimated $11 billion a year. Consumers would still use the same cards they now use, rewards would not be affected, and community banks and small credit unions would be exempt.
In addition to lowering fees, the bill would improve security. Independent networks have less fraud than Visa and Mastercard’s networks, according to the Federal Reserve, and the bill would bar networks controlled by foreign governments like China’s UnionPay from processing American credit cards. Any bank can currently put China UnionPay on its credit cards with no legal restrictions, but the bill would close that loophole.
The Merchants Payments Coalition represents retailers, supermarkets, convenience stores, gasoline stations, online merchants and others fighting for a more competitive and transparent card system that is fair to consumers and merchants. Follow MPC on Twitter, Facebook or LinkedIn for the latest on swipe fees.